Washington Tax Decisions

A corporation in the construction business protests the assessment of retail sales tax and retailing business and occupation (B&O) tax by asserting that it was a speculative builder rather than a prime contractor constructing buildings on properties owned by its shareholders. We affirm the assessment.

A trustee of a trust protests the amount of the assessment of real estate excise tax based on the transfer of a controlling interest in an LLC that has a one-third tenancy in common interest in real property located in this state. The measure of the tax is the true and fair value of the property, which in this matter, is determined by an appraisal of the real property. Decision: Petition granted.

A nonprofit corporation that sells sports materials and support services to churches who subsequently provide sports leagues to youth participants appeals a refund denial and letter ruling issued by the Department of Revenue’s (Department’s) Taxpayer Information and Education Section. The taxpayer argues that: (1) its provision of material and related services to churches is not a retail sale under the true object test; (2) alternatively, if a retail sale, its materials are resold by the churches to league participants, and therefore wholesale sales; and (3) it may deduct the proceeds of its sales from B&O tax under RCW 82.04.4271 because it is a “nonprofit youth organization” that provides recreational services to its members. We find that Taxpayer provides retail sales of its products to churches, which do not purchase the products for resale, and Taxpayer may not deduct the amounts from B&O tax under RCW 82.04.4271.

A local company in the business of used oil collection protests an assessment of hazardous substance tax (HST) on its possession of waste oil, arguing that waste oil is not a “hazardous substance” and that it did not have first possession because it was merely a transporter of the waste oil for hire. Taxpayer also protests the assessment of use tax/deferred sales tax on trucks and trailers that it claims to have used for hire in interstate commerce. We deny Taxpayer’s petition.

A Washington corporation engaged in real estate management disputes the Department of Revenue’s assessment of Service and Other Activities B&O tax on a portion of proceeds it received on a judgment entered in a lawsuit in which it sued for compensation for services rendered. The corporation argues that the portion of proceeds earmarked for its attorney under a contingent fee agreement, and for which the attorney had a statutory lien, is excludable from its gross income, and therefore not subject to B&O tax. Taxpayer also disputes use tax assessed on items which it purchased, and argues that it never received or used the items in Washington. We disagree with the corporation, and affirm the Department’s assessment of Service and Other Activities B&O tax and use tax.